(AU) Cafe2U's USA Adventure

Cafe-in-a-van franchise Cafe2U embarked on expansion to the USA to diversify and grow. Managing Director Derek Black shares the experience with Simon Sharwood.

When Derek Black tried to buy a van in America, he learned that everything is bigger in the USA, but that bigger is not always better.

"In Australia we call a van a Toyota Hiace or a Combi," he says. "There's nothing that small in America. When we went shopping for a van they turned up with something you could hold a party in."

Black was shopping for vans in his capacity as Managing Director of Cafe2U, a mobile coffee van franchise with more than 100 franchisees in Australia, a further 50 in Europe and an ambition to keep growing.

"There is limited growth capacity in Australia," Black says. "Going offshore means we will have less reliance on one country's royalty stream."

The USA appealed because of its sheer size and also because Black perceived a gap in its coffee culture.

"We found in our pilot that Starbucks had done a lot of work for us because their coffee requires flavours to give it some body. We recently won a bronze medal at the Golden Bean Awards. The USA also has a lot of business parks that are a great distance from the nearest Starbucks. Those characteristics fit well with Cafe2U's model of only operating more than 200 metres from a bricks-and mortar cafe, however, the USA is already served by mobile food vendors. America also has long experience of food vans bringing takeaway food to businesses but they use very large vehicles that take up space and stay for a long time," he says. "I was told by one employer that they 'turned a coffee break into a lunch hour and a lunch hour into a vacation.' Our model is to be there for ten minutes, then we're out and back tomorrow."

Black also felt that, despite America's economic woes, the nation was ready for mobile coffee in the workplace.

"The interesting thing about our business model is that coffee is not recession-proof, but it is recession-resistant," he says. "In the UK and Australia we have seen increased sales per van."

Tasting the market

Convinced that the Cafe2U's model of franchisees making daily visits to workplaces with around 20 staff would work in the USA, Black set about conducting a pilot scheme. The city of San Diego was chosen for this test, which involved finding and fitting out a suitable van (the company found a suitable vehicle), tests of the company's coffee blend and the size of the cups customers expected. The company also re-tested its assumptions about customer demographics, to ensure the territories it offered American franchises would work as well as those it carves out in Australia and elsewhere.

These tests allowed the company to fine-tune its offering so it was ready for a master franchise which Cafe2U sought by joining the International Franchise Association to meet locals with experience of bringing franchise systems to America.

"We were pleasantly surprised by the volume of interest from the franchising community in our business and Australian business in general," Black says. "They [Americans] see Australia as an innovative country."

One hiccup came in negotiations when Black perceived politeness as positive sentiment.

"Americans are a positive people," he says. "We would get a neutral to positive answer when the sentiment was negative." The company overcame those incidents, found a master franchiser and has since started negotiations with sub-masters to handle individual states.

"The sub-masters will spearhead the growth”, Black says. "We hope to have 200 units on the ground in four years."